China’s largest SOEs delist as tensions with US escalate, US & Taiwan strike deal to negotiate formal trade ties & UN says "reasonable to conclude" forced labor in Xinjiang -- China Boss News 8.22.22
Newsletter
The Big Story in China Business
China’s largest SOEs delist from NYSE as tensions with US escalate
Five state-owned giants - China Life Insurance Co., PetroChina Co., China Petroleum & Chemical Corp, Aluminum Corp. of China and Sinopec Shanghai Petrochemical Co - “all disclosed their intentions to delist in statements published in quick succession on Friday,” Bloomberg reported. One expert told Bloomberg that the SOEs “are in strategic sectors and deemed to have access to information and data that the Chinese government may be hesitant to give access to foreign regulators.”
Although hundreds more China-and Hong-Kong-based businesses, including Alibaba Group Holding Ltd. and Baidu Inc., also “risk being kicked off US Exchanges as the Securities and Exchange Commission increases scrutiny of the firms,” delisting of the national-level Chinese state-owned enterprises is more noteworthy as an indication of worsening U.S.-China ties, Bloomberg said.
Bloomberg:
While the delistings will have little impact on the companies themselves given their New York shares are thinly traded, the moves underscore escalating tensions between the US and China, said Marvin Chen, a strategist at Bloomberg Intelligence.
Relations between the superpowers have been especially tense in recent days after US House Speaker Nancy Pelosi’s trip to Taiwan prompted several days of Chinese military drills around the island.
Congress is considering legislation that could speed up the delisting deadline to as soon as 2023, adding further pressure for the two sides to quickly reach a deal.
Two state-linked airlines are also likely to “follow in the footsteps of the five state-owned enterprises,” WisdomTree Asset Management’s Liqian Ren told Fortune business magazine.
Fortune:
“The state-owned firms are seeing that the writing is on the wall for them,” Liqian Ren, director of modern alpha at investment firm WisdomTree Asset Management, told Fortune, and indicates that a bigger shift might be underway for other public China-based companies as well.
. . . While “China does have incentives to improve their relations with the U.S., [their ties] have been seriously damaged in the last few years. The trust is very low, especially with the recent Taiwan flareup,” Ren says. At the same time, U.S. regulators have been very clear that they want full access and compliance. There’s not going to be a two-tier system of access” that Beijing desires, she says.
For the rest of Bloomberg’s update, China State-Owned Giants to Delist From US Amid Audit Spat, click here. For Fortune’s report, The ‘writing is on the wall’ for ‘Chimerica’ on U.S. stock exchanges as $318 billion of Chinese equity flees Wall Street, click here.
Law and International Xi
US and Taiwan strike deal to negotiate formal trade relations
“The US and Taiwan agreed on Wednesday to begin formal trade and investment talks as relations between Washington and Beijing have grown increasingly strained,” Financial Times last week reported.
FT:
The Biden administration said late on Wednesday that the sides had reached “consensus on the negotiating mandate”. The initiative will “deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses”, deputy US trade representative Sarah Bianchi said.
Although the decision to commence formal negotiations on U.S.-Taiwan trade “falls short of Taiwan’s hopes for a bilateral free trade deal,” it is an important milestone in Taiwan-U.S. relations, and Taiwanese representatives are hopeful that a free trade agreement will be on the table at a future date, FT said.
For the rest of FT’s report, US and Taiwan to hold trade talks amid China tensions, click here. USTR’s press release and a link to the negotiating mandate can be accessed here.
China conducts new military drills, sanctions Taiwanese officials during US lawmakers’ trip to Taiwan
Keep reading with a 7-day free trial
Subscribe to China Boss News to keep reading this post and get 7 days of free access to the full post archives.